Wednesday, October 21–Jim Wyckoff’s Morning Markets Report
Global stock markets were mixed overnight. U.S. stock indexes are set to open the New York day session narrowly mixed. It now appears less likely the U.S. Congress and the Trump administration can come to agreement on a new Covid-19 stimulus package before the U.S. elections in less than two weeks. All sides are still in communication regarding getting some kind of a stimulus package for Americans, however. The U.S. Senate Republicans could stymie any deal that is agreed upon by the House and the Trump administration. Corporate earnings reports are also in focus at present.
Rising Covid-19 cases in the U.S., Europe and South America continue to dampen trader and investor enthusiasm at mid-week. Drug makers are rushing for a successful vaccine, but none appear ready for public consumption any time soon.
In other news, China recently eased its rules on banks trading in the China currency, the yuan, allowing the currency to strengthen. Reports say China is promoting the yuan as the new world reserve currency. The yuan today rose nearly 0.5% to its strongest level against the U.S. dollar since July of 2018. China continues to recover more rapidly from Covid-19 as the U.S. and Europe see rising cases. The Yuan has strengthened more than 7% against the greenback since late May. “In addition to dollar weakness, the yuan is being underpinned by a wide interest-rate premium over the rest of the world. China’s 10-year government bond yields are around 3.2% as the gap versus the yield on U.S. Treasuries hovers around the highest on record,” said an SP Angel email dispatch this morning.
The important outside markets early today see the U.S. dollar index lower again and hitting a six-week low. Nymex crude oil prices are lower and trading around $41.00 a barrel. The yield on the benchmark U.S. 10-year Treasury note is 0.8% today.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the Federal Reserve’s beige book. Several Federal Reserve officials also are slated to speak today.
–Jim
U.S. STOCK INDEXES
December S&P 500 e-mini futures: Prices are slightly higher in early U.S. trading. Bulls have the firm overall near-term technical advantage but have faded a bit recently. The shorter-term moving averages (4-, 9- and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI, slow stochastics) are neutral to bearish early today. Today, shorter-term technical resistance comes in at Tuesday’s high of 3,469.75 and then at this week’s high of 3,496.50. Buy stops likely reside just above those levels. Downside support for active traders today is seen at this week’s low of 3,410.75 and then at 3,380.00. Wyckoff’s Intra-day Market Rating: 5.5
December Nasdaq index futures: Prices are slightly higher in early U.S. trading. Shorter-term moving averages (4- 9-and 18-day) are neutral early today. The 4-day moving average is below the 9-day. The 9-day average is above the 18-day. Short-term oscillators (RSI, slow stochastics) are neutral early today. Shorter-term technical resistance is seen at Tuesday’s high of 11,792.00 and then at this week’s high of 11,950.50. On the downside, shorter-term support is seen at the overnight low of 11,585.00 and then at 11,500.00. Wyckoff’s Intra-Day Market Rating: 5.5.
U.S. TREASURY BONDS AND NOTES FUTURES
December U.S. T-Bonds: Prices are lower and hit a 4.5-month low in early U.S. trading. Bulls are fading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term technical resistance is seen at the overnight high of 173 24/32 and then at 174 even. Shorter-term support lies at the overnight low of 172 17/32 and then at 172 even. Wyckoff’s Intra-Day Market Rating: 4.0
December U.S. T-Notes: Prices are lower and hit a four-month low in early U.S. trading. Shorter-term moving averages (4- 9- 18-day) are bearish early today. The 4-day moving average is below the 9-day. The 9-day is below the 18-day moving average. Oscillators (RSI, slow stochastics) are bearish early today. Shorter-term resistance lies at the overnight high of 138.24.5 and then at Tuesday’s high of 138.28.5. Shorter-term technical support lies at the overnight low of 138.13.0 and then at 138.08.0. Sell stops likely reside just below those levels. Wyckoff’s Intra-Day Market Rating: 4.0
EURO CURRENCY
The December Euro currency futures are higher and hit a four-week high in early U.S. trading. The shorter-term moving averages for the Euro are bullish early today, as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators for the Euro are bullish early today. The Euro currency finds shorter-term technical resistance at the overnight high of 1.1884 and then at 1.1900. Shorter-term support is seen at the overnight low of 1.1834 and then at 1.1800. Wyckoff’s Intra Day Market Rating: 6.5
NYMEX CRUDE OIL
December Nymex crude oil prices are weaker in early U.S. trading. Bulls are working on a near-term price uptrend. The shorter-term moving averages are bullish early today as the 4-day is above the 9-day. The 9-day is above the 18-day moving average. Short-term oscillators (RSI and slow stochastics) are neutral to bearish early today. Look for buy stops to reside just above technical resistance at this week’s high of $41.90 and then at $42.02. Look for sell stops just below technical support at $40.00 and then at $39.36. Wyckoff’s Intra-Day Market Rating: 4.0
GRAINS
US grain futures are higher again in early U.S. pre-market trading. Grain market bulls remain in solid technical control. Bullish speculators continue to enter the grain futures markets as the charts are fully bullish. There are no early clues to suggest that market tops are close at hand. The path of least resistance for prices remains sideways to higher.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission
(CFTC) has said about futures trading (and I agree 100%):
1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
Jim Wyckoff